A dormant Michigan shopping center, The Village at Knapp’s Crossing in Grand Rapids, filed for Chapter 13 bankruptcy 10 months ago. However, the owner of the property failed to draft a reorganization plan to the court’s satisfaction, and the judge converted the application to a Chapter 7 bankruptcy. The development was intended to be the area’s first lifestyle shopping complex, but reportedly failed from the start.
Court records show debts of $11.5 million to banks and the cities, along with legal costs. The reorganization plan that was presented failed to break even and fell short by over $324,000 per year. It was reported that details about the insolvency sale have not been finalized. It is unknown whether the complex will be sold as a complete unit, or sold separately.
The judge said that expecting creditors to continue bearing the risk after 10 months was unfair. The media report stated that only a particular type of buyer would be interested in such a property. The sale of the property could prove tricky, and marketing strategies will have to be carefully considered. The bankruptcy trustee, along with the creditors, will orchestrate the sale of the property in a way to yield the maximum amount of money to pay the creditors.
Business owners in Michigan who are facing insolvency may want to be proactive in filing for the protection of bankruptcy. Chapter 7 liquidation essentially liquidates an individual’s non-exempt assets for dispersal to creditors. Secured debt, such as car loans and mortgages, will not be affected despite the bankruptcy filing. This may be a suitable solution for a business owner to start fresh and rebuild a stable financial position.
Source: mlive.com, “Plans to sell Village at Knapp’s Crossing are underway after bankruptcy judge’s ruling“, Jim Harger, June 11, 2014